LESSON 3

• Manufacturing systems


  Arrangements of facilities, equipment, and people to produce goods and services under controlled conditions
• Manufacturing systems


  • Produce standardized products in large volumes
  • Have a finite capacity and contribute fixed costs that must be borne by the products produced
  • Variable costs are added as labour is employed to combine or process the raw materials and other components
  • Value addition takes place during the production process for the product
  • The cost of output relative to the cost of input can be measured, as the actual cost is known i.e. productivity is measurable quantity
• Custom manufacturing


  The oldest and most popular approach where skilled craftspeople produce every item by hand, typically with the help of equipment
• Job shop or batch/intermittent manufacturing

  The manufacturer aims to create small batches of various custom products for clients, where switching from the manufacture of one product to another can be challenging
• Continuous-flow or process manufacturing


  Systems built for the mass production of a single product, with a continuous process flow of raw materials coming in and finished products going out
• Modular production or manufacturing


  A manufacturing strategy that aims to balance mass-production with flexible workflows that adapt to changing market conditions or client needs
• Additive manufacturing


  A technology where tools like 3D printers allow manufacturers to create objects by steadily adding material to a base, unlike the more common subtractive manufacturing approach
• Service systems


  Present more uncertainty with respect to both capacity and costs, where services are produced and consumed in the presence of the customer and there is little or no opportunity to store value, as in a finished goods inventory
• Designed capacity


  The planned or engineered rate of output of goods or services under normal or full scale operating conditions
• The uncertainty of future demand is one of the most perplexing problems faced by new facility planners
• Design for a minimum demand would result in high utilization of facilities but results in inferior service and dissatisfaction of customers because of inadequate capacity
• System/effective capacity


  The maximum output of the specific product or product mix the system of workers and machines is capable of producing as an integrated whole, which is less than design capacity or at the most equal it because of the limitation of product mix, quality specification, and breakdowns
• Actual capacity


  Even less than system/effective capacity because of many factors affecting the output such as actual demand, downtime due to machine/equipment failure, unauthorized absenteeism, and short-term effects such as breakdown of equipment, inefficiency of labour
• System efficiency


  Expressed as ratio of actual measured output to the system capacity
• Efficiency


  The ratio of actual output to effective capacity
• Utilization


  The ratio of actual output to design capacity
• Capacity planning


  The act of balancing available resources to satisfy customer demand or project capacity needs
• Capacity is the rate of productive capability of a facility, usually expressed as volume of output per period of time
• Capacity planning is the first step when an organisation decides to produce more or new products
• Reasons production managers are concerned about capacity


  • Sufficient capacity is required to meet the customers demand in time
  • Capacity affects the cost efficiency of operations
  • Capacity affects the scheduling system
  • Capacity creation requires an investment
• Importance of capacity decisions

  • Have a real impact on the ability of the organisation to meet future demands for products and services
  • Affect operating costs
  • Are usually a major determinant of initial cost
  • Often involve long-term commitment of resources
  • Can affect competitiveness
  • Affect the ease of management
• Capacity planning


  The process of determining the resources and capabilities necessary to meet business demands, involving creating a resource plan by analyzing and forecasting business capacity, documenting it, and using best practices for implementation